Possible delays in the import of new products due to coronavirus outbreak in China has disrupted the component supply in India. In a recent revelation, the price of LED bulbs may witness a rise of 10 percent from March 2020 onwards, as the manufacturers face a supply shortage of electronic components, triggered by factory shutdowns in China. 99acres brings to you the impact of COVID-19 on several other important industries in India.
As the outbreak of coronavirus spreads in China, some of the world’s largest firms and companies have started to paint a stark picture of the broken supply chains, disrupted manufacturing, and flagging demand for their products. The impact can largely be felt on industries such as electronics, machinery, organic chemical, and plastic, which have an indirect bearing on the real estate sector. In a scenario, where critical components for product manufacturing in India are all imported from China; the prolonged shutdown of industries in the country has led to pricing issues and supply-chain shocks in India. Moreover, with the province of Hubei and Eastern parts of China taking a huge hit, the industries in India that rely immensely on imports, have come to a grinding halt.
Here is how the outburst of the virus has impacted two most important industries of the country.
The lighting/electronics industry
The manufacturers of consumer durables in India are heavily dependent on China for the supply of critical components such as printed circuit boards, compressors for air-conditioners and coils for LED lights. Domestic lighting, especially the professional lighting segment, is a major industry that is gravely hit due to the coronavirus epidemic and the resultant price hike by Chinese vendors. To apprise, over 60 percent of the components for manufacturing an LED bulb in India are sourced locally, while the remaining are imported from China. Reportedly, the vendors from China have increased the component and the product prices by 2-3 percent due to the massive slowdown in the factory activity. Reduced supply and an increase in the component prices are likely to impact the prices of the finished products in India.
As averred by Bhawana Bhatnagar, Interior Stylist, Founder of Casa Exotique, “Due to massive infrastructure, extensive R & D facilities, and availability of skilled labour at a marginally low price, China enjoys economies of scale in its manufacturing industry. The contribution of the country to global businesses is quite indispensable. From electronic goods to lighting equipment, China has become the topmost procurement market for millions of companies worldwide. India’s electronic industry is also no exception. Unfortunately, after the Coronavirus outbreak, China’s electronic market has taken quite a blow. The production has plummeted in the affected areas. As a result, the escalation in the prices of LED bulbs is quite evident. Being optimistic, we expect that the world will soon find a cure to this menacing disease and things will get normalised soon.”
China is one of the largest exporters of Indian Steel. The sluggish demand for steel in the country due to the outbreak of coronavirus has sent shivers down the spine of the Indian steel industry. The halt in the economic activities in China, including the construction of roads, bridges and buildings has caused the domestic inventory to pile up and has created downward pressure on the inventory prices. Adding further to the economic woes, the prices of iron ore, which is the main raw material for the production of steel, has fallen to its lowest levels in the last six months. Reduced steel prices have further impacted the earnings of industry majors such as SAIL and TATA Steel in India. As opined by the experts, the negative impact of the outbreak would continue for the next 2-3 years.
Plywood industry, which is largely dependent on the migrant population, has witnessed a substantial decline in the production, caused by the exodus of the migrant workforce. While summer is the best season for the industry, the outbreak of COVID-19 has jeopardised the expectations of the manufacturers. As per a recent revelation, the production in the plywood industry has been reduced to half. Going forward, workers in large numbers are expected to leave their city of operation and return to their native place.
Other than the above, the outburst of COVID-19 has also impacted industries such as textiles, automobile, agrichemicals, and pharmaceuticals in India. While the prevalent scenario has already disrupted the supply of critical components, the scale of the impact would depend on how long this disruption continues.